Annotate this Case












December 16, 2014


Argued November 18, 2014 Decided

Before Judges Ostrer and Hayden.

On appeal from the Board of Review, Department of Labor Docket No. 394,045.

Carolyne S. Kalson argued the cause for the appellant.

Peter H. Jenkins, Deputy Attorney General argued the cause for the Board of Review (John J. Hoffman, Acting Attorney General; Lewis A. Scheindlin, Assistant Attorney General, of counsel; Mr. Jenkins, on the brief).

Respondent Walmart Associates, Inc., has not filed a brief.


Cheryl Wright appeals from the final decision of the Board of Review, which deemed her ineligible for unemployment benefits based upon the administrative finding that she was terminated from her job for severe misconduct. N.J.S.A. 43:21-5(b). We reverse and remand for the Board to consider whether the grounds for Wright's termination constituted severe misconduct under Silver v. Bd. of Review, 430 N.J. Super. 44 (App. Div. 2013).

The record reveals that Wright worked for WalMart Associates from February 24, 2003 until June 20, 2012, when she was terminated from her position as an assistant manager. When Wright filed a claim for unemployment benefits, a deputy in the Division of Unemployment Insurance determined that she was disqualified for benefits under N.J.S.A. 43:21-5(b) because she was discharged for gross misconduct related to the work. Specifically, the deputy found that Wright was "discharged for the theft of an amount of at least $200[,]" and such "actions are punishable as a crime[.]"

Wright appealed this determination to the Appeal Tribunal, which held a telephone hearing on December 19, 2012. According to Walmart's witnesses, the discharge was for lack of integrity, not for theft. The event leading to Wright's termination occurred on June 8, 2012, when she found a customer's mobile phone in the store. Unable to find the customer, Wright announced on the loudspeaker that she would be returning it to the Verizon store across the street during her lunch break.

Peter Hartwell, the store manager, testified that the owner of the phone contacted the store in the afternoon seeking the lost item. Based on Wright's announcement that she would return the phone, Hartwell then went to the Verizon store. The Verizon store employees informed Hartwell that the phone had not been left and a review of the store's surveillance camera did not show Wright entering the store.

Hartwell returned to Walmart and questioned Wright as to the phone's location. According to Hartwell, Wright stated that she dropped the phone off at Verizon on her lunch break. Hartwell then informed Wright that the Verizon store staff said the phone had not been returned. Wright still insisted that the phone had been dropped off at lunch time.1

The following day, the Verizon store manager contacted Hartwell to report that Wright had dropped the phone off later that evening. That same day, Wright told Hartwell that the previous day she had given the phone to her daughter to bring to the Verizon store but her daughter's car broke down. Hartwell testified that Wright explained that she retrieved the phone from her daughter and brought it over that evening.

Wright testified that she intended to bring the phone across the street to the Verizon store but became very busy. When she took her lunch break, her daughter happened to be in the parking lot so Wright gave the phone to her to bring it to the Verizon store. Wright stated that when she first spoke to Hartwell, she thought her daughter had brought the phone to Verizon. After she learned later that her daughter's car had broken down, Wright explained, she brought the phone to Verizon herself and the next day she explained to Hartwell what happened.

At the Appeal Tribunal hearing, there was a dispute as to Walmart's lost and found policy. Hartwell testified that Wright violated the policy because lost and found items were to be logged in "at the customer service desk and . . . kept in our cash office." Wright testified that employees are not permitted to take things out of the store, but that there was no written policy stating this. Wright further testified that she was unaware of any Walmart policy that would have required her to give the phone to lost and found. No Walmart policy was produced at this hearing.

The Appeal Tribunal issued its decision, which modified the deputy's determination that Wright was terminated for gross misconduct and found that Wright was disqualified for benefits due to severe misconduct pursuant to N.J.S.A. 43:21-5(b). Specifically, the Tribunal determined that Wright made misrepresentations to Hartwell when she stated that she had taken the customer's phone and returned it to Verizon. The Appeal Tribunal determined that Wright's conduct evidenced a "lack of integrity" and as such, constituted "severe misconduct connected with the work." The Tribunal did not find Wright had violated any Walmart policy or that she was terminated for violating a company policy.

Wright appealed the Appeal Tribunal's decision to the Board. In its decision, the Board remanded the case to the Tribunal for another hearing to determine whether Wright was discharged for simple misconduct, severe misconduct, or gross misconduct connected with work.

On March 27, 2013, the same appeals examiner conducted a second telephone hearing. No representatives from Walmart participated in this hearing. Wright offered into evidence copies of Walmart's lost and found policy effective April 1, 1993, which was the policy in effect at the time Wright was hired, as well as the Courtesy Desk Operations lost and found procedure dated January 1996. The lost and found policy provided that "[t]he Facility Manager must make every attempt to locate the owner of articles found within the facility." The Courtesy desk procedure stated that "[i]t is store management's responsibility to ensure every effort is made to find the rightful owner and return the found article." Wright argued that she followed, rather than violated, the policy by taking steps to get the phone to the Verizon store.

In its second decision in this matter, the Appeal Tribunal again determined that Wright was disqualified for benefits as her discharge was based on her misrepresentations to Hartwell, which "constitute[d] severe misconduct." No further explanation or analysis was provided. Wright appealed the Appeal Tribunal decision to the Board, which issued its final decision on June 21, 2013. The Board agreed with the Appeal Tribunal's decision on "the basis of the record below[.]" This appeal followed.

Our role in reviewing the decision of an administrative agency is limited. Brady v. Bd. of Review, 152 N.J. 197, 210 (1997). "Unless . . . the agency's action was arbitrary, capricious, or unreasonable, the agency's ruling should not be disturbed." Ibid. We "intervene only in those rare circumstances in which an agency action is clearly inconsistent with its statutory mission or with other State policy." Ibid. (quoting George Harms Constr. Co., Inc. v. N.J. Tpk. Auth., 137 N.J. 8, 27 (1994)).

Until 2010, N.J.S.A. 43:21-5(b) identified two types of misconduct that prevented full receipt of benefits. "Gross misconduct" is an "act punishable as a crime" and results in a complete disqualification for benefits. Ibid. "Misconduct" is found where an employee's act is "improper, intentional, connected with one's work, malicious, and within the individual's control, and is either a deliberate violation of the employer's rules or a disregard of standards of behavior which the employer has the right to expect of an employee." N.J.A.C. 12:17-10.2(a). It results in an eight-week disqualification from unemployment benefits. N.J.S.A. 43:21-5(b).

We described this "two-prong standard" for misconduct as follows: "First, the conduct must be improper, intentional, connected with the work, malicious, and within the employee's control. Second, the conduct must also be either a deliberate violation of the employer's rules or a disregard of the standards of behavior which the employer has the right to expect." Silver, supra, 430 N.J. Super. at 53. Misconduct must also be "more than simply inadequate job performance that provides good cause for discharge." Parks v. Bd. of Review, 405 N.J. Super. 252, 254 (App. Div. 2009).

In 2010, an intermediate type of misconduct, severe misconduct, was added to N.J.S.A. 43:21-5(b). L. 2010, c. 37, 2, eff. July 1, 2010. An employee who has been discharged for severe misconduct is disqualified for unemployment benefits until reemployed for at least four weeks and has earned at least six times the employee's weekly unemployment benefit rate. Ibid. The statute does not define severe misconduct, but does provide examples, such as "repeated violations of an employer's rule or policy," "repeated lateness or absences after a written warning by an employer," and "abuse of leave." Ibid.

Obviously, the threshold of culpability required for severe misconduct, which carries a more stringent disqualification from benefits, cannot be less than that for simple misconduct. Silver, supra, 430 N.J. Super. at 55. As we previously observed, the conduct given as examples under the severe misconduct statute required the same finding of intent, deliberateness, or malice as simple misconduct. Id. at 55-56.

Applying the Silver reasoning here, we are convinced that the Board's decision is not based on the necessary analysis and findings. The Appeals Tribunal found that Wright's conduct evidenced a "lack of integrity" based on her misrepresentations to Hartwell. Without referencing the regulatory definitions of misconduct and severe misconduct and without deciding whether the necessary elements for either type of misconduct were present, the tribunal again concluded that Wright's "lack of integrity" constituted severe misconduct. Specifically, the Tribunal failed to consider whether Wright's actions were intentional, deliberate, and malicious, the first prong of the Silver standard or whether there was any violation of company policy or a disregard of applicable standards of behavior. Accordingly, we reverse and remand this case to the Board to reconsider its decision in light of the principles pronounced in Silver and to make the necessary findings and conclusions of law.

Reversed and remanded. We do not retain jurisdiction.

1 Another Walmart employee, Kimberly Perez-Miller, the shift manager, was present at this meeting and corroborated Hartwell's testimony.